The report on the performance of listed real estate enterprises by Vietnam Investment Rating Joint Stock Company (VIS Rating) recently released shows a somewhat changing picture of the real estate market.
Accordingly, real estate transactions nationwide in the second quarter of 2024 reached the highest level since the fourth quarter of 2022, along with the continuous increase in real estate prices in Hanoi and Ho Chi Minh City. Major investors such as Vinhomes, Khang Dien, Nam Long and Dat Xanh, ... led the industry in sales from newly launched housing projects in Hanoi and Ho Chi Minh City. In the first half of 2024, new sales of these investors increased by an average of 31% compared to the same period last year.
In the first 6 months of 2024, the total debt of real estate investors listed on the stock market increased by 19% compared to the same period in 2023. The increase in outstanding debt mainly came from the development of new projects of some large real estate companies such as: Van Phu Invest (total debt increased by 54% compared to the same period in 2023), DIG (increased by 59%), Nha Khang Dien (increased by 33%)...
Debt is expected to continue to increase as many businesses are planning to increase borrowing to develop new projects. In return, the bright spot is that debt repayment capacity will recover slightly in the first 6 months of 2024 thanks to improved operating cash flow and cash resources.
Meanwhile, although the market has shown signs of improvement, inventories continue to increase, especially for businesses with projects facing legal problems or segments lacking liquidity. Leading the group of businesses with large inventories is Novaland Group. By the end of the second quarter, the inventory of this business had increased to VND142,024 billion. Compared to the total assets of the business of VND240,178 billion, Novaland's inventory accounts for nearly half.
Similarly, Nam Long Group recorded a sharp increase in inventory in the first half of the year. Accordingly, by the end of the second quarter of 2024, Nam Long's inventory value reached VND 19,164 billion. Another enterprise, Khang Dien Group, also had a high increase in inventory, up to VND 21,458 billion, while at the end of last year it was only VND 17,786 billion. Compared to total assets of VND 28,401 billion at the end of June, Khang Dien's inventory/total assets ratio is up to 75%.
In the structure of real estate inventory, the group of products from unfinished projects accounts for the majority, mostly due to legal problems, the rest is due to some segments not receiving good demand from the market. According to experts, only a few businesses will be able to reduce inventory, while many businesses are very worried about semi-finished inventory, that is, projects that have been implemented for many years but are still not completed due to legal problems, the solution lies in the hands of competent authorities. Only when the problems are resolved soon can this "blood clot" be released soon.
VIS Rating experts also provided a remarkable figure, that is, more than 2/3 of listed investors have cash flow to repay debt from weak to extremely weak levels, specifically operating cash flow below 5% of total debt, especially investors affected by project legal issues. The heavy dependence on short-term loans causes significant refinancing risks.
“In addition, about VND105 trillion of real estate bonds will mature in 2025. We estimate that about 50% of bonds maturing in the next 12 months are at risk of late principal and interest payments; most of them are related to investors who have recently delayed principal/interest payments such as NVL, Sunshine, Van Thinh Phat and Hung Thinh,” said the VIS Rating report.
